Daily MAAD pulled back slightly Thursday from new short to intermediate high reached Wednesday and best level since March 2009. Nine issues were positive and 11 were negative. Daily MAAD Ratio was “Overbought” at 1.98.

Call/Put Dollar Value Flow Line (CPFL) hit another short to intermediate high Thursday. CPFL Ratio was moderately “Overbought” at 1.69.

Cumulative Volume (CV) in S&P 500 Emini hit new short to intermediate high Wednesday by rallying above resistance point made back on April 11 when S&P 500 cash index closed at 1587.75. On relative basis, however, Emini CV has been lackluster in face of higher S&P prices.

Market Overview – What We Think:

Thursday’s marginal selling in major indexes proved little except that some players were willing to take profits. But, considering weak volume underpinnings into recent strength, currently “Overbought” conditions, and short-term volatility in zone of vulnerability, we would not be surprised to see some weakness developing on Minor Cycle in sessions just ahead.

While Cumulative Volume in S&P 500 Emini finally caught up with cash indexes Wednesday to extent it bettered its April 11 resistance high, compared to overall market strength since April 18, S&P Emini CV has underperformed to suggest a lack of commitment on upside by futures buyers.

At same time, VIX-derived volatility data relative to volume DID NOT reach new lows as index prices rallied to new highs to suggest move to new highs is suspicious. It wouldn’t take much for volatility to begin rallying, a reflection of negative pricing.

How Minor Cycle plays out will determine staying power of larger Intermediate Cycle that has been underway since November 16. That trend is now “Overbought” and historically mature.

Index

Price Channel Stops (10-Bar MAs of Highs/Lows )

Weekly

Monthly

5/6

5/7

5/8

5/9

5/10

5/10

5/31

S&P 500 Index

SELL1567.36

SELL1572.24

SELL1575.54

SELL1578.44

SELL1583.18

SELL1526.66

SELL1360.47

Dow Jones Industrials

SELL14615.90

SELL14643.25

SELL14659.52

SELL14676.02

SELL14712.53

SELL14205.35

SELL12701.94

NASDAQ Composite

SELL3245.70

SELL3258.66

SELL3270.01

SELL3281.06

SELL3301.08

SELL3178.45

SELL2896.99

Value Line Index

SELL3484.43

SELL3500.21

SELL3508.93

SELL3515.54

SELL3536.84

SELL3434.31

SELL2895.29

Note: Stop levels, a function of the extant trend, are based on the trailing moving average price channels for the Highs or the Lows of an index. Whether or not a specific index is suggesting a “Buy” or Sell” is determined by whether or not index prices are above or below the current channel Stop levels. Stop levels should only be used as an entry or exit guide and in conjunction with other market entry and exit strategies.